Fundamentals of Financial Management
Fundamentals of Financial Management
15th Edition
ISBN: 9780357307724
Author: Brigham
Publisher: CENGAGE L
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Chapter 8, Problem 10P
Summary Introduction

To determine: The difference between the required return.

Introduction:

The Required Rate of Return:

The required rate of return is the rate which should be the minimum amount need to be earned on an investment to keep that investment running in the market. When the required return is earned only then the users and the companies invest in that particular investment.

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The current risk-free rate of return, rRF, is 2 percent and the market risk premium, RPM, is 8 percent. If the beta coefficient associated with a firm's stock is 1.4, what should be the stock's required rate of return? Round your answer to one decimal place. _______ ´%
Suppose the risk free rate is 2, 32%, the expected return of the market portfolio is 5, 64% and the beta of stock X-Bros S. A. is 1. 10. What is the expected cost of equity of X-Bros S. A. (in percent)?
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Fundamentals of Financial Management

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